Definitive Agreement Under Which Dell Acquire EMC for $67 Billion

Dell Inc. and EMC Corporation have signed a definitive agreement under which Dell, will acquire EMC, while maintaining VMware as a publicly-traded company.

The combination of Dell and EMC will create the world's largest privately-controlled, integrated technology company. The company will be a leader in the attractive high-growth areas of the $2 trillion information technology market with complementary product portfolios, sales teams and R&D investment strategies.

The transaction combines two of the world's greatest technology franchises with leadership positions in servers, storage, virtualization and PCs and it brings together strong capabilities in the fastest growing areas of the industry, including digital transformation, software-defined data center, hybrid cloud, converged infrastructure, mobile and security.

Since becoming a private company, Dell has had the flexibility and agility to focus on customers and invest for long-term results. The transaction will unite Dell's strength with small business and mid-market customers with EMC's strength with large enterprises to fuel profitable growth and generate significant cash flows. The combined company will consist of strategically-aligned businesses and incubated high-growth assets, fostering innovation, enabling customer choice and attracting and retaining world-class talent.

VMware will remain a publicly-traded company and continue to provide customers value through software-defined data center technology, together with its cloud, mobile and desktop offerings. This transaction is expected to accelerate VMware's growth across all of its businesses through significant synergies with Dell's solutions and go-to-market channels. VMware remains committed to investing in and partnering with its industry ecosystem.

The transaction is expected to close in the second or third quarter of Dell's fiscal year ending February 3, 2017 (within the months of May to October 2016).

EMC was by far the biggest company in storage but now, with the addition of Dell storage, the gap with other firms will be even bigger.

At $67 billion price, the merger is largest-ever technology one and of course the largest-ever in storage before the former record of Compaq acquired by HP, for $25 billion in 2001 (see below the ranking of more than $5 billion M&As involving companies in storage.) At a time, HP and Cisco were rumored to buy EMC.

This acquisition is a huge financial operation for Dell and maybe VMware then will be sold to finance the deal as now Dell faces $60 billion in total debt with the EMC deal.

Here is a comparison of their portfolio: